Bill C-266

2nd Session, 40th Parliament,

57 Elizabeth II, 2009

house of commons of canada

BILL C-266

An Act to establish the position and Office of the Credit Ombudsman, who shall be an advocate of the interests of consumers and small businesses in credit matters and who shall investigate and report on the provision, by financial institutions, of consumer and small-business credit on a community basis and on an industry basis, in order to ensure equity in the distribution of credit resources

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

1. This Act may be cited as the Credit Ombudsman Act.

INTERPRETATION

2. The definitions in this section apply in this Act.

“community” means an area that the Credit Ombudsman considers to be appropriate for providing information on credit for the purposes of this Act and may consist of all or parts of one or more electoral districts.

“electoral district” has the meaning given to that expression in the Canada Elections Act.

“financial institution” means a bank, trust company, credit union or other organization established by or under an Act of Parliament or of the legislature of a province that, as part of its normal business, lends money or provides credit.

“Minister” means the Minister of Finance.

“small business” means a business that is entitled to a small-business deduction under section 125 of the Income Tax Act.

“Standing Committee” means the standing committee of the House of Commons appointed to deal with matters of finance.

CREDIT OMBUDSMAN

3. (1) There are hereby established the position and Office of the Credit Ombudsman.

(2) The Credit Ombudsman shall be an advocate of the interests of consumers and small businesses in credit matters and shall investigate and report on the provision, by financial institutions, of consumer and small-business credit on a community basis and on an industry basis, in order to ensure equity in the distribution of credit resources.

4. (1) The Governor in Council shall appoint a Credit Ombudsman selected by the Minister from a list of candidates recommended by the Standing Committee.

(2) The Credit Ombudsman holds office during good behaviour for a term of five years, but may be removed by the Governor in Council at any time on a resolution of the House of Commons following a report by the Standing Committee.

(3) In the event of the absence or incapacity of the Credit Ombudsman, or if the position of Credit Ombudsman is vacant, the Governor in Council may, on the recommendation of the Minister, appoint another person to act as Credit Ombudsman for a term not exceeding six months.

(4) No person may serve more than two terms as Credit Ombudsman.

(5) The Credit Ombudsman shall receive such remuneration, benefits and reimbursement of expenses as may be fixed by the Governor in Council.

(6) The Office of the Credit Ombudsman is part of the federal public administration.

(7) The Credit Ombudsman may employ, under the Public Service Employment Act, such officers and staff as are necessary to carry out the purposes of this Act.

ADVOCACY

5. (1) The Credit Ombudsman may receive and investigate complaints in writing from consumers and small businesses in cases where financial institutions have unreasonably refused credit, placed unreasonable conditions on credit availability or refused to deal fairly with applicants for credit.

(2) The Credit Ombudsman shall investigate those complaints referred to the Credit Ombudsman that appear to show that a financial institution has unreasonably refused credit, placed unreasonable conditions on credit availability or refused to deal fairly with an applicant for credit.

(3) The Credit Ombudsman shall establish and make public criteria for granting or refusing credit on an equitable basis and for avoiding unfair discrimination in the availability of credit on a community basis and on an industry basis, and shall apply those criteria in an investigation under this section.

(4) A financial institution shall, notwithstanding any other Act of Parliament, cooperate with the Credit Ombudsman in an investigation under this section and provide the information requested by the Credit Ombudsman respecting the credit application at issue, including private information concerning the complainant if the complainant has consented in writing to the disclosure of that information.

(5) If the Credit Ombudsman is not satisfied that the financial institution has dealt fairly with the complainant initially or following the investigation, the Credit Ombudsman may, after giving 90 days’ prior written notice to the financial institution, and with the prior written consent of the complainant,

(a) report the matter in detail to the Minister in a report to be kept confidential; and

(b) report the matter in general terms in a periodic report to the Standing Committee and, in so doing, name the financial institution but not the consumer or small business.

FINANCIAL INSTITUTIONS WITH UNFAIR CREDIT POLICIES AND PRACTICES

6. (1) If the Credit Ombudsman is of the opinion, based on complaints that have been investigated under section 5, that a financial institution has unfair credit policies and practices in one or more communities, the Credit Ombudsman may give notice to the institution of the changes that are necessary to establish fair credit policies and practices.

(2) Within 90 days after receiving a notice under subsection (1), a financial institution shall advise the Credit Ombudsman of the changes that will be made in the financial institution’s credit policies and practices.

(3) If the Credit Ombudsman is not satisfied with the changes proposed by a financial institution under subsection (2), or if, on investigation, the Credit Ombudsman finds that the proposed changes have not been made, the Credit Ombudsman shall submit a report on the matter to the Minister.

(4) The Minister shall forthwith cause every report received under subsection (3) to be laid before both Houses of Parliament, and the report shall be deemed to have been referred to the Standing Committee for review and report to the House of Commons.

DISCLOSURE OF CREDIT AVAILABILITY

7. The Credit Ombudsman shall

(a) collect information on credit sought from financial institutions by, and granted by financial institutions to, consumers and small businesses to ascertain, by statistical analysis, whether the availability of credit is equitably distributed on a community basis and on an industry basis throughout Canada;

(b) for the purposes of paragraph (a), require every financial institution, when a consumer or small business applies for credit, to complete a form showing information prescribed by the Credit Ombudsman respecting the granting or refusal of the credit and give it to the consumer or small business, who may complete it and send it to the Credit Ombudsman with the further information prescribed by the Credit Ombudsman, including the rate of interest charged and other terms of the loan, the electoral district, community and industry group in which the consumer or small business resides or operates and, in the case of an individual, the sex of the individual seeking the credit;

(c) analyze and prepare reports on the availability of credit in various electoral districts, communities and industry groups, and to male and female applicants;

(d) submit reports prepared under paragraph (c) to the Standing Committee; and

(e) cooperate with consumer groups, business groups and financial institutions to facilitate the achievement of the purposes of this Act.

GENERAL

8. (1) Except in reference to a report under subsection 6(3), the Credit Ombudsman shall keep confidential all information received under this Act.

(2) Subsection (1) does not apply if the information serves as evidence of, or is relevant to the investigation of, an offence under the Criminal Code or any other Act of Parliament.

9. The Credit Ombudsman may, with the prior approval of the Minister, define communities and industry groups and prescribe forms and information to be provided or volunteered for the purposes of this Act.

10. The Credit Ombudsman may require every financial institution to establish, in the form prescribed by the Credit Ombudsman, a notice describing the function of the Office of the Credit Ombudsman and the means of contacting the Office, and to

(a) post it prominently at every place of business where credit may be applied for; and

(b) include it in advertisements or other communications, whether physical or electronic, offering credit.

ANNUAL REPORT

11. The Credit Ombudsman shall submit to the Minister by April 1 of every year a report on the functions of the Office of the Credit Ombudsman during the previous year and on the availability of credit on an equitable basis in Canada, and the Minister shall forthwith cause the report to be laid before both Houses of Parliament.

OFFENCES AND PENALTIES

12. (1) Every person who knowingly provides false information to the Credit Ombudsman in connection with the operation of this Act is guilty of an offence.

(2) Every person who refuses or fails to provide information requested by the Credit Ombudsman under this Act is guilty of an offence.

(3) Every person who commits an offence under this Act is liable, on summary conviction, to a fine not exceeding $5,000 for a first offence and to a fine not exceeding $25,000 or imprisonment for not more than six months, or to both, in the case of a second or subsequent offence.